Sunday, September 1, 2013

Beware subsidies of the markers of status

The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people. But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them.

How might subsidies of the markers of status "undermine" the character traits that produce them? Among other possible explanations, by sending the message that deferring gratification is unnecessary, or at least undesirable, and that a purpose of government is to relieve us of that awful burden.

5 comments:

2. Don't focus on maintaining and increasing the number of people in the middle class. Focus on helping people become part of the upper class. If you do that, the hard-working people who fail to reach the upper class usually end up in the middle class.

3. Americans should think globally. They don't have to be creative. An entrepreneur simply has to travel to other countries and ask himself "What successful businesses have I seen in the U.S. and other places that I don't see here?" My list of "new business ideas" is always several pages long.

4. Entrepreneurs who aren't creative geniuses should become market driven, not product driven. They should read the news every day. One man's disaster is another man's business opportunity.

Don't focus exclusively on that; a second--equal--focus on helping the poor join the middle class is needed, as well. Logically, that would be included in your point, via your expansion of it in the next sentence.

However, I think an explicit focus is necessary in an environment where government policy, subsidy suite, and tax credits, however well-intentioned, serve, instead, to keep the poor trapped in their poverty through overt dependence on government .

E Hines: "poor trapped in their poverty through overt dependence on government"

I don't buy that part of your comment, Eric. As a newspaper man I covered America's antipoverty programs in the late 1960s. As an international businessman I have helped the poor in developing and undeveloped countries as well as in the U.S.

When I talk one-on-one to poor people in the U.S., I come across a lot of individuals with drug problems, a lot of people with mental health problems, a lot of people with physical problems, and a lot of people with poor social skills. Few stay poor to collect government handouts.

On top of those problems, there is the (to use Defending Enterprise's term) "cascade-of-misfortune" problem.

In a previous comment thread on this blog, I noted a recent report from Princeton University: "Poverty and all its related concerns require so much mental energy that the poor have less remaining brainpower to devote to other areas of life, according to research based at Princeton University. As a result, people of limited means are more likely to make mistakes and bad decisions that may be amplified by — and perpetuate — their financial woes."

Responding to my comment, Defending Enterprise noted: "For anybody who has actually seen how a cascade of misfortune unfolds -- it happens all too frequently in the management of business -- it is obvious that the poor are often led to make bad choices by the pressures of poverty."

During my younger days, I was a big fan of John Steinbeck's novels. If I had been an adult 100 years ago, I probably would have been a labor union organizer. (I like adventure.) Yes, we need to pay attention to the poor (or as some leftists like to call them, the "economically deprived"). But successful people need to realize that the problems of the poor go beyond laziness and government dependence.

Today the lack of economic opportunity is a big issue for both the poor and the middle class. America needs to create a robust economy. Like Defending Enterprise, you and I know how to do that. Unfortunately, the Obama Administration doesn't.

... a lot of individuals with drug problems.... Few stay poor to collect government handouts.

No doubt. And no doubt few stay poor for the benefits; although in some states that pays better than actually working.

It seems to me, though, that drugs, and a lot of the mental and physical health problems (not all, certainly) are cascades from their poverty, not causes of it. And dependence on government traps them in that poverty.

It's not that government welfare has no role, it's that it should be last on the list of assistance sources. ADC, for instance, was blatantly destructive of opportunity, even of family, however well-intentioned. That was replaced by TANF, which now is being gutted by the Feds.

Our poor also are trapped in their poverty through government policy on education and on (business) regulation, contradictorily by the lack of regulation in Food Stamp availability and use, excessive unemployment insurance payments, and so on.

If our poor really are lacking in the mental energy to get out of their poverty, we need government to get out of their way so they can focus their energy.

As to the poor being lazy, that's your red herring; you defend it. [g]